BANGKOK, Sept 16 (Askume) – The Thai government will nominate a ruling party loyalist and critic of the central bank governor as governor of the Bank of Thailand, two sources said, in a bid to settle a long-running dispute over interest rates that could create a strong influence over the institution.
Sources with direct knowledge of the matter said the Pheu Thai-led government is backing former Deputy Prime Minister and Finance Minister Kittirat Na Ranong, 66, for the post. There is currently no media report on Kittirat’s nomination.
While serving as Finance Minister from 2012 to 2014, Kittirat often clashed with the then-central bank governor over monetary policy issues .
In recent months, he has backed the current administration’s call to cut interest rates to revive the faltering economy, which grew just 1.9% last year.
A few weeks after the populist Pheu Thai Party returned to power in September 2023, the Bank of Thailand raised its benchmark interest rate (THCBIR=ECI) to a decade high of 2.50% for the eighth consecutive meeting and has kept it there since despite repeated demands for lower interest rates.
Kittirat did not immediately respond to a request for comment, while the BOT said it had nominated two candidates for the position but declined to disclose them. The permanent secretary of the Treasury declined to comment.
A seven-member panel independent of the central bank will decide which of the three nominees to appoint in the coming weeks and will have to get approval from the finance minister, the cabinet and the king.
The BOT governor cannot guide the central bank’s interest rate policy, but the board of directors headed by him does elect the Monetary Policy Committee , which consists of the governor, two deputy governors, and four external experts.
When current BOT Chairman Sethaput Suthivartanruaiput completes his term in September 2025, the chairman will also have some influence over the selection of the next BOT chairman.
Rate Line
The Bank of Thailand said its policy settings are neutral and growth remains below potential due to structural issues.
Csaput said lowering interest rates could boost the economy in the short term, but it could have unintended long-term consequences and is therefore not an effective solution.
The Bank of Thailand’s refusal to cut interest rates has drawn criticism, including from Pheu Thai Party leader Patongtarn Shinawatra, elected prime minister last month, who in May described the central bank’s independence as an “hindrance”.
On Monday, Commerce Secretary Pichai Naripthaphan again urged the central bank to cut interest rates to boost liquidity as the government works to boost growth in Southeast Asia’s second-largest economy.
Selection committee chairman Fellow Limpongpan said all three nominations for the chairman position are subject to performance review by the BOT, which takes two weeks.
“After the review, there will be a committee meeting and another meeting by mid-October to take a decision,” he told Askume.
Current BOT board chairman Porametti Vimolasiri, who is serving his second term, was appointed in 2018 by the government of former Prime Minister Prayuth Chan-ocha, who was also handpicked by Governor Sethaput.
